Scott Schneeberger • Oppenheimer & Co. Inc.

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President & CEO Jeffrey Jones affirmed that the company's strategy is 'locked' and will not change, as his successor was an internal appointment involved in its development. CFO Tiffany Mason explained the EBITDA bridge, noting that elevated FY25 healthcare and legal costs are annualized into the FY26 guide, while severance costs are normalized. She expressed confidence in margin improvement due to cost savings from a recent organizational realignment and other efficiencies. She also confirmed the new tax law is viewed as a tailwind factored into guidance.

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CFO Tiffany Mason explained the franchise volume decline was primarily a structural shift resulting from the company's opportunistic buyback of 123 franchise locations year-to-date. Executive Jeffrey Jones added that company-owned performance was boosted by improved client conversion and retention, driven by an enhanced client experience. On the DIY side, Jones stated that strong revenue growth was fueled by attracting more complex filers. He characterized the flat paid volume as a disciplined outcome, as the company chose not to chase unprofitable free filers in an "unprecedented promotional environment" led by a competitor.

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President and CEO Jeff Jones clarified that H&R Block is not considering discontinuing Emerald Advance but is focused on optimizing its performance. Regarding DIY tiers, he stated the company feels good about its lineup's value proposition, which combines SKU features, pricing, and attached services like AI Tax Assist. Jones described the marketing campaign as leaning into the 'It's better with Block' promise, using digital channels and direct competitive claims. He confirmed the child tax credit change is a customary update not expected to have a material impact.

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CFO Tiffany Mason attributed the higher Q1 OpEx to increased variable field labor from higher volume, planned corporate wage increases, online marketing spend, and notably, higher legal fees and settlements related to an FTC matter. She clarified that without the legal costs, OpEx growth would align with revenue. CEO Jeff Jones added that technology investments are factored into the outlook and managed via productivity savings. Regarding marketing, Jones noted a competitor's early start but stated H&R Block's main push begins in January. Mason confirmed the Pathward partnership remains strong and the economics are reflected in guidance.

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CEO Carlos Quezada attributed the growth in average revenue per funeral to three key initiatives: strategic pricing reviews conducted quarterly with local managers, a cremation conversion strategy that educates families on additional service options, and the new urn core line strategy which has expanded margins. CFO John Enwright stated that the company expects a $5-6 million benefit to cash taxes in 2025 from the new tax act, with smaller incremental benefits in subsequent years.

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CEO Malcolm Wilson highlighted that over half of Q2 wins came from a resurgence in e-commerce, which also drove outsized growth in reverse logistics. CFO Baris Oran reported that the first phase of the ERP implementation is now live in the UK and is expected to drive significant back-office productivity, reduce SG&A, and accelerate future acquisition synergies, with the US implementation planned next.

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CEO Malcolm Wilson noted strong growth in Continental Europe, some softness in the UK, and a pickup in the U.S. CFO Baris Oran added that underlying volumes were slightly positive in Q4 and are expected to be flattish in 2025. Regarding the healthcare win, Wilson described it as a 'milestone' contract originating from the Clipper acquisition that will organically open up the vertical for GXO, similar to how Wincanton is expected to open up the aerospace and defense sectors.

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CEO Malcolm Wilson reaffirmed full-year guidance, expressing high confidence in hitting the midpoint for adjusted EBITDA, driven by contract visibility and efficiency gains. CFO Baris Oran added that Q4 would benefit from lapping a weak prior-year period and improved margin from better multi-tenant warehouse utilization. Oran also confirmed the 30-40% free cash flow conversion target for the year, attributing the strong performance to diligent working capital and CapEx management.

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EVP & CFO Matthew Jacobsen explained that the improved free cash flow guidance is driven by the elimination of about $50 million in 2025 federal cash taxes due to new legislation, with similar benefits expected for the next few years, plus $10-15 million from working capital improvements. He noted the recent 'Portable' acquisition was the larger of two deals and that while the purchase multiple was not disclosed, the company sees significant margin expansion opportunities via its logistics network. He confirmed the M&A pipeline remains active for the second half of the year.

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President and COO Timothy Boswell stated there has been no real change in their view on retail, noting that conversations with large accounts are ongoing and contributing to order book growth. CFO Matthew Jacobsen reiterated that their capital allocation approach is unchanged: they will pursue accretive M&A as opportunities arise while remaining consistent with their framework for share repurchases and dividends.

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CFO Matt Jacobsen explained the EBITDA bridge, citing volume headwinds from 2024, moderating through 2025, offset by rate and VAPS. He noted cost pressures from variable compensation, a company meeting, and new sales hires. President & COO Timothy Boswell addressed VAPS, highlighting a new guided selling/bundling tool to improve sales consistency. He also mentioned that a mix shift towards FLEX units, which have lower VAPS penetration, has been a headwind, while core storage VAPS rates are improving.

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President and CFO Timothy Boswell explained that the year-over-year deficit in average units on rent is shrinking, from ~5% entering 2024 to ~3% in Q3, indicating moderating headwinds. On pricing, he noted modular rental rates (ex-VAPS) were up ~7% YoY with sequentially flat spot rates, while traditional storage AMR was up ~1% YoY, showing stability despite a challenging market.

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Chairman, President & CEO Thomas Ryan confirmed that core cemetery sales growth was broad-based, driven by both positive velocity and pricing. He stated that while 3.3% funeral average growth is high, a 2.5% to 3% range is sustainable, supported by managing discounts and a favorable preneed backlog. Executive VP & CFO Eric Tanzberger advised modeling G&A around $40-$42 million per quarter, but noted potential variability from incentive compensation accruals.

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CEO Thomas Ryan attributed the strong funeral volume to growing market share from their preneed program and effective competition, while noting that quarter-to-quarter volatility can be high. He maintained the full-year guidance of flat to slightly down volume but expressed increased optimism. Regarding cremation, he suggested that as the rate approaches 60%, the pace of growth naturally slows, and future increases are likely to be under 100 basis points annually.

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Chairman and CEO Thomas Ryan acknowledged a tough comparison for Q4 large sales but expressed confidence in returning to low to mid-single-digit growth in 2025 for both sales production and recognition. He confirmed that development activities at Rose Hills limited customer access, impacting large sales, but expects this to resolve in 2025. Regarding funeral volumes, Ryan stated that company models show the pandemic's pull-forward effect diminishing, which, combined with demographic shifts, should lead to volume stabilization in 2025. He also anticipates preneed funeral sales will improve as the company normalizes its transition to a new insurance provider.

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Chief Strategy Officer Ali Faghri confirmed that there is further opportunity. He noted that with the average fleet age now under four years, maintenance cost per mile was already down in the low-to-mid single-digit range in Q2. He stated that XPO expects to continue driving this cost lower in the second half of the year and into 2026.

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CFO Kyle Wismans responded that XPO has modeled severe downturns and believes it can outperform historical industry decremental margins (around 25% in the GFC) by managing its variable costs. Chief Strategy Officer Ali Faghri added that the European business continues to outperform its market with strong sequential EBITDA growth and a growing sales pipeline, positioning it well for an eventual recovery.

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CFO Kyle Wismans confirmed they have stress-tested such scenarios and believe they can perform well by managing variable costs and productivity, noting they expect to achieve better than historical industry decremental margins. Chief Strategy Officer Ali Faghri reported that the European business continues to outperform the market, with five consecutive quarters of organic revenue growth and a strong sales pipeline, positioning it well for a recovery.

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Executive Mario Harik provided examples of new services, including 'retail store rollout,' 'must arrive by date,' and expanded Mexico cross-border solutions. Regarding the sales team, he stated that the initial plan to grow the local sales force by 25% has been achieved, and while some hiring continues, a decision on further significant expansion for 2025 is still under review.

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CFO Scott Kirkland stated the bill is expected to be a net positive by encouraging U.S. investment, with no material impact on the tax rate. CEO Christophe Beck expressed high confidence in managing tariffs through a combination of supply chain optimization and the trade surcharge, which he expects will be a net positive and support the company's 12-15% EPS growth commitment.

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Christophe Beck, Chairman and CEO, explained the Pest Intelligence digital conversion is a multi-year, 'pay-as-you-go' investment. Regarding cross-selling, he highlighted the F&B business as a key beneficiary of the One Ecolab initiative. He confirmed that focused, enterprise-wide plans are in place for the top 35 customers to capture a $3 billion opportunity by delivering best-in-class outcomes.

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CEO Christophe Beck stated that the customer retention rate has remained remarkably stable at close to 95% throughout the recent period of high inflation and pricing actions. He credited this stability to the company's focus on 'Total Value Delivered,' ensuring that the savings customers receive in their operations exceed the price increases. This has created a strong balance of stable retention, strengthening volume, and robust pricing.

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CFO Keith Pratt explained that sales gross profit is expected to be more balanced between Q3 and Q4, unlike the prior year's Q3 spike, though visibility remains fluid. CEO Joseph Hanna noted a good outlook for the education sector despite later orders and highlighted vibrant activity in commercial verticals like data centers and industrial projects. Pratt attributed the modest guidance raise to offsetting factors, including planned expenses for readying fleet, strategic hiring costs, and a cautious outlook on the mixed demand environment. He also estimated the new tax legislation would provide a $10 million to $15 million free cash flow benefit for the year.

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Executive Joseph Hanna noted that while Q1 education bookings were slightly light, activity increased in April, and the fundamental demand drivers remain unchanged. He confirmed larger commercial projects are solid, but smaller projects face some client hesitation despite strong overall quoting activity. Executive Keith E. Pratt stated that the 12% year-over-year increase in monthly revenue per unit on new shipments is very strong, creating a positive pricing tailwind as the fleet turns over. Hanna attributed the TRS-RenTelco recovery to previously delayed semiconductor and computer projects starting up. Pratt explained the guidance was trimmed slightly out of caution for potential project delays in the second half of the year due to macro uncertainty, rather than direct negative feedback from customers.

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Keith E. Pratt, an executive, detailed that in Q4, Mobile Modular's rental revenue growth was balanced, with commercial up 9% and education up 7%. Executive Joseph Hanna added that he expects this balance to continue in 2025, citing strong early quote activity. Hanna provided a segment outlook: good momentum for Modular, a challenging start for Portable Storage, and signs of stabilization for TRS-RenTelco. Pratt explained the significant pricing tailwind, noting a 47% gap between new shipment pricing and the fleet average. He clarified that the flat EBITDA guide despite revenue growth is due to three factors in order of impact: 1) a shift to higher operating expenses to prepare existing fleet for rental, 2) a lower EBITDA run-rate in Portable Storage entering the year, and 3) a mix shift toward faster-growing but lower-margin equipment sales. Regarding capital, Pratt stated that the company has many options, including M&A or increased CapEx if demand warrants, and will remain flexible.

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Executive Joseph Hanna stated that Mobile Modular growth was balanced, with education up 10% and commercial up 8%, and noted that strong pricing is expected to continue. Executive Keith E. Pratt addressed the other segments, noting continued demand softness in Portable Storage and a prolonged but stabilizing downturn in TRS-Rentelco. Pratt also clarified that the net proceeds from the merger termination fee are approximately $86 million after all costs and taxes, which were initially used to pay down debt, and confirmed that substantially all related costs have been incurred.

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CEO Peter Arvan clarified that the inventory increase is a routine result of stocking new products from manufacturers. CFO Melanie Hart added that the new tax bill is expected to provide a slight cash flow benefit from accelerated depreciation but does not anticipate an immediate impact on consumer discretionary spending.

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CFO Melanie M. Hart stated that no additional price increases beyond those already announced are factored into the current guidance. She noted that while there is an opportunity for margin benefit from selling through lower-cost inventory, overall price sensitivity in the current market is a key factor. CEO Peter Arvan commented that permit data is just one piece of the puzzle, alongside weather and dealer feedback, and that his confidence in new construction is tempered by macro factors like interest rates and consumer confidence.

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SVP and CFO Melanie M. Hart explained that customer mix has shifted towards larger, national accounts, partly due to private equity-led consolidation, which POOLCORP is well-positioned to serve. President and CEO Peter Arvan described the remodel market as bifurcated, with cash buyers proceeding while financing-dependent projects are delayed. He noted significant pent-up demand for these semi-discretionary projects, which should drive growth when interest rates ease.

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President and CEO Peter Arvan explained that while storms caused brief closures, the net effect is an expected uptick in maintenance and repair demand, which could offset headwinds in new construction. VP and CFO Melanie M. Hart stated they are satisfied with current inventory levels, noting gained efficiencies, and expect preliminary 2025 equipment price increases from vendors to be in the 2% to 3% range.

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President & CEO Todd Schneider highlighted that SmartTruck technology improves efficiency by reducing driving time, while the sourcing team provides a competitive advantage in the current tariff environment. EVP & CFO Scott Garula projected that CapEx would remain in the 3.5% to 4.0% of revenue range and stated that the company does not expect any material impact from the tax bill mentioned.

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President & CEO Todd Schneider highlighted SmartTruck as a key technology investment for improving route efficiency. EVP & CFO Scott Garula confirmed that CapEx is expected to be in the 3.5% to 4.0% of revenue range going forward and stated that the company does not anticipate any material impact from recent tax legislation on its financials or cash flow.

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President and CEO Todd Schneider praised the Huebsch acquisition as a source of great people, customers, and market capacity, emphasizing that Cintas learns from every acquired company. EVP and CFO Mike Hansen attributed the strong free cash flow to operational excellence, stating the company targets a 90-100% net income conversion rate and expects this to continue, despite potential short-term investments in areas like inventory.

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CEO Todd Schneider clarified that M&A was active across all route-based businesses, focusing on quality companies within existing segments, and declined to comment on multiples. He confirmed the myCintas portal is an important tool that improves customer experience and drives efficiencies by streamlining payments and account management, thereby contributing positively to margins.

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President and CEO Todd Schneider attributed the direct sale performance to the lumpy nature of national account rollouts and difficult comparisons to prior high-growth years. EVP and CFO Mike Hansen explained that the strong free cash flow was partly due to timing and partly to sustainable improvements in accounts payable. He expects full-year free cash flow conversion to be in the typical 90-100% range of net income.

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CEO Sasan Goodarzi explained that Intuit is disrupting the manual, opaque assisted category with a seamless, transparent, and lower-cost virtual alternative, which contributed to the category's growth. CFO Sandeep Aujla added that the marketing strategy involved shifting spend earlier in the season to target assisted filers before they made their decision, which proved effective. He affirmed they feel very good about the ROI on their marketing spend across the entire business.

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CEO Sasan Goodarzi explained Intuit is disrupting the assisted category by offering a more seamless, transparent, and lower-cost digital alternative. CFO Sandeep Aujla clarified that the marketing spend increase was not outsized but was strategically timed earlier in the season to capture assisted filers who make decisions before year-end. He affirmed they feel very good about the ROI on this marketing spend.

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CEO Sasan Goodarzi explained that pricing is now part of a dynamic, AI-driven personalized lineup, so different customers see different offerings, leading to strong monetization for both simple and complex filers. He cited the product's high recommendation score (85) as evidence of positive reception for the full-service experience and price. He concluded by stating that any impact from the 1099-K threshold change is considered immaterial for the season.

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CEO Sasan Goodarzi shared that the early tax campaign successfully drove engagement and confirmed that price is a significant positive factor. A key learning was to focus on the benefits of the 'new way' of tax prep without denigrating traditional experts. CFO Sandeep Aujla explained the Q2 EPS guide reflects a strategic front-loading of expenses, including continued early consumer marketing, increased spend at Credit Karma due to strong ROI, and earlier GBS campaigns compared to last year.

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President and CEO Brad Archer highlighted strong bid activity in non-government sectors, particularly for data centers, noting these projects are often shovel-ready with capital in place. CFO and CAO Jason Vlacich added that immediate government opportunities, like West Texas, likely won't require significant capital, but future growth could involve new builds with protective contract structures. Vlacich also addressed the HFS segment, stating that while the market is competitive and ADR is down slightly, utilization is up, and he expects Q1 trends to continue through 2025.

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CFO Jason Vlacich detailed the contract run-rates, noting the Dilley contract is similar to its predecessor and the Lithium Americas revenue will be back-half weighted in 2025. CEO James Archer provided a comprehensive overview of the Government segment, stating a significant need for beds and active quoting on numerous opportunities where existing assets are in play. Mr. Vlacich confirmed a minimal draw on the credit facility for the note redemption and stated that capital allocation priority is on organic growth opportunities.

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CEO Drew Wilkerson explained that managed transportation and brokerage have strong synergies, with brokerage acting as a key capacity backstop and sales tool for new managed trans customers. CFO James Harris detailed that the 2025 CapEx reduction was part of a normal course evaluation, while the larger 2026 reduction reflects the end of one-time integration spend and a strategic real estate investment.

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CEO Drew Wilkerson expressed high confidence in year-over-year volume growth, citing positive early returns from bid season. He also outlined potential tariff impacts, seeing a short-term tailwind from inventory pull-forwards and a long-term tailwind from near-shoring. CFO Jamie Harris clarified that the $15 million for the Charlotte HQ expansion is a one-time 2025 cost and projected a lower CapEx run-rate of $50-$60 million for 2026.

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CSO Jared Weisfeld noted that recent market tightening makes direct seasonal comparisons difficult. CEO Drew Wilkerson clarified the special projects were tied to hurricane relief, port tightness, and retail needs, highlighting RXO's ability to capture opportunistic freight. Regarding Last Mile, Weisfeld confirmed strong Q3 growth with an expectation for slower, but still positive, growth in Q4. CFO Jamie Harris added that cost-saving initiatives in Last Mile are progressing as planned.

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CFO Chris Eperjesy reiterated margin targets: low-to-mid 70s for rental, mid-20s for used equipment, and mid-teens for TES. CEO Ryan McMonagle addressed tariffs, noting a natural hedge from their large rental fleet and inventory, and ongoing work with suppliers to mitigate costs. McMonagle also stated that rental yields are expected to hold and improve in 2025, and that benefits from the infrastructure bill are in the 'mid-innings' and represent a continued tailwind.

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